MSRDC Ltd is an incorporated entity formed by incorporation as public limited company under provisions of The Companies Act, 1956. Various transactions undertaken by MSRDC are accounted and audited in terms of provisions of the Companies Act 1956 and Memorandum of Association and Articles of Association under which Company has been incorporated.
Entire share capital of MSRDC is held presently by Government of Maharashtra and its nominees. Thus, it is a government company as defined under Section 617 of the Companies Act 1956.
MSRDC maintains its books of account to meet the requirements of Section 209 of the Companies Act 1956 so as to give true and fair view of the state of affairs of the company.
The accounts maintained by the company to meet the provisions of Section 209 are audited by statutory auditors appointed under the provisions of section 224 by statutory auditors are appointed by Comptroller and Auditor General of India since MSRDC is a Government Company.
Statutory Auditors audit the books of accounts maintained by Corporation and present their audit report annually as per requirements of section 227 of the Companies Act 1956.
MSRDC prepares its account and financial statements at historical cost on the basis of going concern so as to comply in all material aspects with applicable accounting principles in India, the mandatory accounting standards issued by Institute of Chartered Accountants of India and the relevant provisions of the Companies Act 1956. Significant accounting policies followed by the company in preparation of its accounts is annexed herewith.
MSRDC is using accounting software package named “ Tally” for day to day accounts related works. All books of accounts and vouchers are computerized.
Annual accounts compiled in terms of above provisions and auditors report issued by statutory auditors and comments of Comptroller and Auditor General of India in terms of provisions of section 619(4) are placed on the table of legislature from time to time. MSRDC also plans to commence hosting its annual accounts and audit reports on its web site.
(A) Basis of Preparation of Accounts
Financial statements have been prepared at historical cost on the basis of a going concern so as to comply in all material aspects with applicable accounting principles in India, the mandatory Accounting Standards issued by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act 1956.
The Company generally follows the mercantile system of accounting and recognizes income and expenditure on accrual basis, except those with significant uncertainties such as Interest on delayed payment of toll, Interest on Machinery and Mobilization Advance etc. Difference between the actual results and estimates are recognized in the period in which the results are known or materialized.
(B) Fixed Assets
Fixed Assets are stated at Original cost of acquisition/construction, including freight, duties, taxes and other expenses incidental to installation, acquisition or improvement.
Lease hold assets which are transferred to the Corporation by GOM (hereinafter referred to as “ GOM” ) at nominal cost are shown at revalued cost, including Lease Premium paid.
Fixed Assets also include
- Expenditure incurred and advances given for acquisition of fixed assets during the period of construction of projects and are carried forward under the respective project accounts as Capital Work in Progress and includes expenses incurred and incidental to implementation of projects.
- Net Interest paid on borrowed funds for projects in accordance with Accounting Standard - 16 on Borrowing Costs issued by the Institute of Chartered Accountants of India.
- Expenditure on renewal and/or modernization of fixed assets, resulting in significant improvement in productivity or operation efficiency is capitalized with assets concerned.
Depreciation is provided as follows:
- Leasehold assets are being amortized over the period of Lease.
- Build Operate Transfer (BOT) projects assets and assets where the toll collection period is dependent on the recovery of costs, are amortized on a pro- rata basis over the period beginning from the month the asset is put to use till the time the Corporation is entitled to collect revenue under the Concession agreement/arrangement
- Other assets are depreciated on straight Line Method at the rates and in the manner provided for in Schedule XIV to the Companies Act, 1956. Depreciation on revalued component of the Fixed Assets is transferred from the revaluation reserve account.
- Depreciation on additions/disposals of the fixed assets during the year is provided on pro-rata basis according to the period during which assets are put to use.
Long term Investment are stated at cost. Provisions for diminution in the value of investment are made in case diminution is considered other than temporary. Current Investments are stated at lower of cost or Market value.
(E) Prior Period Adjustments
As per the Accounting Standard – 5, issued by the Institute of Chartered Accountants of India, Prior Period Adjustments as a result of errors or omission in the preparation of Final Statements of one or more prior periods are separately disclosed in Profit and Loss Account
(F) Revenue Recognition
- Toll receipts, net of claims and expenses towards repairs and maintenance thereof, transferred by the GOM in respect of the 44 bridges to the Corporation, has been treated as a Capital Receipt and Credited to Capital Reserve in terms of Accounting Standard - 12 on Accounting of Government Grants issued by the Institute of Chartered Accountants of India. The underlying assets on which the GOM has collected toll are not accounted for in the books of account, as they do not belong to the corporation.
- Toll income in respect of the completed projects, belonging to the Corporation is recognized as income on accrual basis except those with significant uncertainties.
- Income from toll securitization is accounted on time basis
- Toll income in respect of projects, wherein the cost incurred exceeds 25% of Project Cost is recognized as income wherever authorized.
Cess : Dues from GOM towards additional tax on petrol & diesel cuss are accounted on accrual basis.
Dividend : Dividend income is recognized when right to receive payment is established.
Lease Rental : Incomes from lease rental are accounted on time basis.
(G) Borrowing Costs
Borrowing Costs includes cost of Bonds issue, guarantee commission payable, interest on long term borrowings, loan processing charges, after deducting income from temporary investment, interest on advances to contractors and dividends received.
(H) Impairment of Assets
The Company identifies impairable assets based on cash generating asset for each project concept at the year end in term of Para-5 to 13 of AS – 28 issued by ICAI for the purpose of arriving at impairment loss thereon, if any, being the difference between the book value and recoverable value of relevant assets. Impairment loss when crystallizes is charged against revenue of the year.
(I) Miscellaneous Expenditure
Miscellaneous Expenditure includes preliminary expenses and deferred Revenue expenditure.
Preliminary expenses are amortized over a period of 10 years.
Borrowing costs related to project assets which are substantially completed in parts and put to use before the full project assets is completed, are treated as deferred revenue expenditure to be amortized over a period of 5 years following the year in which the project is fully completed to achieve its entire economic potential.
(J) Contingent Liabilities
Contingent liabilities are disclosed by way of notes to the accounts.
(K) Retirement / Staff Benefits
Liability for companies contribution in respect of mandatory retirement and other staff benefits such as provident fund, family pension fund and pension contribution fund whenever applicable is accounted for on cash basis.
Provision for Gratuity and leave Benefit is made on the basis of actuarial valuation.
(L) Foreign Currency Transaction
Transactions in Foreign Currencies are recorded at the Exchange Rate prevailing on the Transaction date.
(M) Government Grants
Government grants/support received from Government towards assets/projects undertaken by the Corporation are treated as Capital Reserve – Government grant.
Some of the Government grants are received in the form of complete and incomplete assets, which are transferred to the Corporation. The costs of assets, which have been already incurred by the Government, are treated as Capital Reserve (Grant in Kind).
In terms of Accounting Standard AS-12 on Deferred Government Grant issued by Institute of Chartered Accountant of India, the Corporation has recognized the proportionate amount of such grants towards depreciation in its profit and loss account
(N) Deferred Tax
Deferred tax is recognized on timing differences; being the differences between the taxable incomes and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets subject to the consideration of prudence are recognized and carried forward only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. The tax effect is calculated on the accumulated timing difference at the year end based on the tax rates and laws enacted or substantially enacted on the balance sheet date.